Cash flow

Cash flow is a measure of inflow and outflow of cash from the business. Most inflows from a small business come from operations: cash sales and collections of receivables. Other possible sources of cash inflow would include investment income from interest or dividend income, and financing income derived from sales of assets (not in the ordinary course of business), borrowed funds, lawsuit and insurance payments, and miscellaneous contract sources (e.g., installment contract payments). Cash outflows include a variety of expenses including inventory purchases, wages, dividends, operating costs (utilities, insurance, maintenance, etc.), interest, deposits, and all taxes. Note, income tax savings from losses are included in the inflow of cash to the business. Positive cash flow refers to more money coming into the business than is going out; negative cash flow refers to the converse situation.